Dicerna Pharmaceuticals (NASDAQ:DRNA) gained 207% and Ultragenyx (NASDAQ:RARE) followed with a 101% first-day jump the next day as the biotech boom reached a new gear last week. Dicerna’s first-day return was the best since Baidu’s (NASDAQ:BIDU) IPO in 2005 (+354%), and Dicerna and Ultragenyx became the only two biotechs since 2000 to double in price on the first day. They kicked off what will likely be by far the busiest stretch for biotech IPOs since 2000. Five of the nine companies that priced last week were biotechs, and eight more are scheduled to price this week. Since 2000, no two-week period has seen more than six biotech IPOs completed. With the surge in biotech offerings, last month ended with the most overall IPO pricings (17) in January since at least 1995 and the most IPO filings (26) in January in over a decade.

Dicerna and Ultragenyx post large gains after higher-than-expected pricings

Dicerna’s and Ultragenyx’s returns were even more impressive considering their seemingly aggressive above-the-range pricings. Dicerna raised its range from $11-$13 to $14 and priced at $15. Ultragenyx lifted its own range from $14-$17 to $19-$20 and priced at $21. Compared with their initial midpoints, Dicerna and Ultragenyx ended the week up 231% and 173%, respectively. For the remaining IPOs, pricing discipline remained the norm, as no other deal priced above the midpoint. Malibu Boats (NASDAQ:MBUU) was the best non-biotech performer, gaining 27%.

Six companies set terms last week, bringing the number of deals on the calendar to 18. Ladder Capital (NYSE:LADR), which is focused on commercial mortgage loans, investments secured by mortgage loans and investments in commercial real estate assets, launched the largest deal, seeking $225 million. Talmer Bancorp (NASDAQ:TLMR), a WL Ross-backed bank with 94 branches in the Midwest, set terms for a $210 million IPO.

JD.com (JDC.RC), the largest online direct sales company by transaction volume in China, filed for a $1.5 billion IPO. For the first nine months of 2013, its revenue grew 71% to $8.0 billion, and its number of active customer accounts increased 57% to 36 million. Two other tech companies filed for much smaller offerings. Paylocity (PCTY) provides online payroll and human capital management software to 6,850 mid-sized businesses. Coupons.com (NASDAQ:COUP) provides digital coupons to 17 million monthly unique visitors. For the first nine months of 2013, its transaction volume rose 49% to 940 million. A key competitor, RetailMeNot (NASDAQ:SALE), is up 69% since its IPO in July 2013. One biotech also submitted an initial filing. Aquinox Pharmaceuticals (AQXP), which is in Phase 2 trials for treatments of inflammation and cancer, filed for a $58 million IPO.

New IPO filers (week of January 27, 2014)

Company (Ticker)

Business

Deal Size ($mm)

LTM Sales ($mm)

JD.com (JDC.RC)

Chinese online retailer

$1,500

$10,082

Paylocity (PCTY)

HR software for small businesses

$115

$91

Coupons.com (COUP)

Digital coupons

$100

$151

Aquinox Pharmaceuticals (AQXP)

Inflammation and cancer treatments

$58

$0

IPO market snapshot

The Renaissance IPO ETF, which trades under the symbol IPO, gained 2% last week as recent IPOs recovered from the market’s downturn in the previous week. The 17 IPOs in 2014 have raised $5.2 billion and, thanks largely to Dicerna and Ultragenyx, have produced an average return of 25%. There have been 57 IPOs in the past 90 days, with total proceeds of $16.7 billion and an average return of 41%. The active IPO pipeline includes 103 companies looking to raise a total of $24.9 billion.

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